More Disclosure Pressure on Fed

The Senate approved several amendments to the federal budget resolution on Thursday that call on the Federal Reserve Board to release details about institutions that have received assistance during the financial crisis.

One amendment, sponsored by Senate Banking Committee Chairman Chris Dodd and Sen. Richard Shelby, the panel's ranking member, would require the Fed to publish details on the lending facilities it has created during the financial crisis, including information on collateral and valuation. The change, which passed on a 96-to-2 vote, also would require the central bank to disclose how many institutions have participated in its facilities and how much it is working with outside contractors to manage the facilities.

But a separate amendment sponsored by Sens. Bernie Sanders, I-Vt., and Jim Bunning, R-Ky., would also require the Fed to name the institutions that have borrowed from the discount window. That amendment was approved by a vote of 59 to 39.

Neither amendment is binding, since the budget resolution is simply designed to sketch out the shape that lawmakers hope the government's spending plan will ultimately take.

But the amendment sparked criticism from some observers who countered that the $2.2 trillion the Fed has spent through its liquidity facilities and support does not come from taxpayer funds. Fed Chairman Ben Bernanke has said the central bank is essentially creating money to support its market interventions.

The Fed has fought previous efforts to disclose which institutions it lends to. Gil Schwartz, a former Fed lawyer who now works in private practice, said the amendment could weaken confidence in some banks. "They run the risk that people come up with all sorts of disaster scenarios about why this particular institution is working with the Fed," he said.

A spokeswoman said the central bank is working with Congress on the issue.

"The board is engaged in a top-to-bottom review of all our transparency practices with the goal of disclosing as much useful information as possible, consistent with the need to ensure the effectiveness of our efforts to stabilize financial markets and support the economy," she said.

Also Thursday, the Fed said it lent $133.1 billion through the discount window, down 2.3% from a week earlier.

The Fed said it had extended nearly $46 billion by Wednesday through the discount window to support American International Group Inc. The central bank also has a limited liability corporation designed to help the insurance giant. Loans there were valued at $18.5 billion.

The Fed's balance sheet grew 0.3%, to $2.1 trillion. Reserves held by financial institutions at the central bank jumped 32.5%, to $1.1 trillion.